Whether you’re approaching retirement age or you are planning ahead, the ins and outs of funding your golden years can be confusing. Here are the answers to the most common questions seniors have about their Social Security benefits. For more detailed questions, you may want to consult a workers compensation lawyer.
When Can I Begin Receiving Social Security Benefits?
You can claim Social Security benefits as early as age 62 or as late as age 70. The longer you wait, the higher your monthly benefit amount will be. The benefit amount is reduced by a percentage for each month before your “full retirement age” you claim benefits. Full retirement age depends on the year you were born, but ranges from 65 for those born before 1937 to 67 for those born after 1960.
How Much Money Will I Receive Each Month?
The amount of your monthly Social Security benefit depends on a number of factors. According to the Social Security Administration, the average retired worker receives about $1,341 each month. You could receive more or less depending on how long you worked, how much money you made during your career, and other factors. The best way to find out your monthly benefit amount is to consult the Social Security Administration’s Retirement Estimator, online at https://www.ssa.gov/retire/estimator.html.
What Are Social Security Credits?
Credits determine whether you qualify to receive Social Security benefits. Credits are determined by your total annual earnings. In 2016, you get a credit for every $1,260 earned, up to a maximum of four credits each year. Depending on your retirement age, you need a certain number of lifetime credits to qualify for benefits. No one needs more than 40 credits to qualify for any Social Security benefit.
When Do I Apply for Social Security Benefits?
Apply for retirement benefits three months before you want to begin receiving Social Security payments. You can do so online at ssa.gov. This is the fastest way to apply for benefits, but you can also choose to apply by phone or in person if you prefer.
How Are My Benefits Affected if I Continue to Work During Retirement?
Many seniors choose to supplement their retirement benefits by holding a part-time job. If you have reached full retirement age based on your date of birth and you continue to work, there is no impact on the amount of your Social Security benefits. If you are younger than full retirement age, there is a deduction of $1 from your benefits for each $2 you earn above $15,720. That means you can make up to that ceiling with no effect on your benefits. In some cases, working may actually increase your benefits since you are continuing to pay Social Security taxes.
Should I Apply for Social Security Benefits Now, or Wait Until Full Retirement Age?
If you are older than age 62, you may be considering retirement. This is a personal decision that must take into account your current cash needs, your current health, and expected longevity. For some people, it makes sense to take a lower benefit monthly amount but claim benefits sooner.
Are Social Security Benefits Taxed?
Social Security benefits are tax free for most retirees, and partially tax free for all who receive benefits. The amount taxed depends on your income. If your adjusted gross income plus nontaxable interest plus one-half of Social Security benefits exceeds $25,000 ($32,000 if you’re married) up to 50% of your benefits can be taxed. If your income is more than $34,000 on a single return or $44,000 on a joint return, up to 85 percent of your benefits can be taxed.
To get answers to questions about your specific retirement situations, consult a professional along with the resources at ssa.gov.